LNC - Linc Energy

basilio · 1 June 2010

If it were me, I'd look very seriously at the option of selling syngas to an existing power station in the Adelaide city area in order to get a large scale development up and running, thus thoroughly proving to everyone that UGC works, at relatively low capital cost. All that's really needed is to get the UGC happening and build a pipeline (gas pipelines being relatively cheap compared to power stations). That plus some relatively minor work at the power station.

Only real risk is that conventional natural gas producers drop prices sufficiently to keep syngas out of the market. Possible, but such an outcome certainly goes against the global trend of higher gas prices.

Why wouldn't LINC produce and sell electricity directly from Chincilla and other UCG plants? I was looking at Alakline Fuel cell (AFC) website and came across an analysts view on where they see their fuel cell going.

In fact they are really, REALLY excited about the LINC connection because they believe there will scores of LINC UCG plants operating within a few years converting syngas into effectively carbon less electricity at a very good price.

Would be really interesting to see how the current AFC trial is going and when some commercial energy production is commenced.

News flow from AFC since November 2009 has been stellar. We believe it is only a matter of time before the market values AFC's significant
growth potential. Commercial tie-ups with Air Products, Centrica,
WSP Group and Linc Energy ("Linc") are testament to the wholesale
power producing potential of AFC's high efficiency, zero-carbon, low
cost technology. Forecast roll-out of Underground Coal Gasification
("UCG") with Linc, in which carbon capture is free, generates
potential 20yr cash flow that changes our fair value upwards from
£50m to £207m.

This revision assumes a 22% WACC, no green credits,
no maintenance income and no growth after 4.2GW of UCG is running
by 2021. We rate AFC a Speculative Buy and set a 137p target price.
Projected 4.2GW Linc UCG roll-out by 2021. Based on Australian clean
coal major Linc Energy's objectives (ASX: LNC, www.lincenergy.com.au),
we project 4.2GW of UCG sites throughout Australia, Europe and the US by
2021.In December, Linc signed a deal with AFC giving it exclusive rights to
deploy AFC's technology for power generation at these sites. Sales of AFC's
50kW modular system to Linc at £35K on a 43% margin and a 10% royalty
to AFC on power produced generate 20yr cash flow with a NPV of £157m.

The whole report is worth a read.

http://www.afcenergy.com/wp-content/uploads/AFC-Energy-plc-AFC.L-Allenby-Capital-Mar-18-2010.pdf

Smurf1976 · 1 June 2010

basilio said:
Why wouldn't LINC produce and sell electricity directly from Chincilla and other UCG plants?

No real reason why they couldn't do that. But in the case of SA, there's already a massive use of gas for power generation not far away. If, and that's a big "if", capital is an issue for LNC then just supplying the gas to someone else who produces the electricity would be a means of getting cashflow, thoroughly demonstating the gas production technology to build investor confidence etc fairly quickly.

It's like a mining company with some iron ore. More often than not, the company that mines the iron ore never ends up operating a steel works. They just sell the ore to someone else who makes the steel. Even the big companies do that.

Personally, I think liquid fuels production offers more long term potential than power generation for them anyway. But they seem to be having a few issues coming up with the $ billions required to get large scale production up and running, hence my suggestion that they ought to be looking at all options.

noirua · 3 June 2010

It seems posters here know far more that I do about LNC. Having read everything, I think everything, I've added to my holding.
It's all your fault if the stock tanks

basilio · 3 June 2010

It seems posters here know far more that I do about LNC. Having read everything, I think everything, I've added to my holding.
It's all your fault if the stock tanks

If were all so bloody clever why the hell hasn't this wonder stock shot into the stratosphere?

Perhaps the reality is that there are many companies with good ideas and good products but success does not necessarily lie with these components. In fact a decent ramper can do wonders with most worthless piece of rubbish - as long as he/she can persuade enough people to jump in.

Not quite sure where that leaves LINC. Just 'Waiting for Bondie' I suppose...

profitmann · 3 June 2010

basilio said:
Why wouldn't LINC produce and sell electricity directly from Chincilla and other UCG plants? I was looking at Alakline Fuel cell (AFC) website and came across an analysts view on where they see their fuel cell going.

In fact they are really, REALLY excited about the LINC connection because they believe there will scores of LINC UCG plants operating within a few years converting syngas into effectively carbon less electricity at a very good price.

Would be really interesting to see how the current AFC trial is going and when some commercial energy production is commenced.

The whole report is worth a read.

http://www.afcenergy.com/wp-content/uploads/AFC-Energy-plc-AFC.L-Allenby-Capital-Mar-18-2010.pdf

LNC can`t produce more than a set amount of MW`s from Chinchilla and I heard it`s less than 50 MW. Power into the grid is the issue - transmission infrastructure?? - Who pays - Ergon?? IMO there is an over supply of power atm given some 800 MW has recently come on stream into the Ergon network. Really need the CSG sector to take off so they place demands into the system and Linc can "sell" some generation. AFC is still a long shot - no trials reported tells me nothing is happening!

Smurf1976 · 5 June 2010

profitmann said:
LNC can`t produce more than a set amount of MW`s from Chinchilla and I heard it`s less than 50 MW. Power into the grid is the issue - transmission infrastructure?? - Who pays - Ergon?? IMO there is an over supply of power atm given some 800 MW has recently come on stream into the Ergon network. Really need the CSG sector to take off so they place demands into the system and Linc can "sell" some generation. AFC is still a long shot - no trials reported tells me nothing is happening!

Average wholesale electricity price 2008-09: Qld $34.00, SA $50.98

Average wholesale electricity price so far in 2009-10: Qld $34.11, SA $56.83

If power generation is the aim, then I really can't see a lot of point in doing it in Qld when they have the opportunity to gain far greater revenue elsewhere.

Mickel · 14 June 2010

noirua said:
It seems posters here know far more that I do about LNC. Having read everything, I think everything, I've added to my holding.
It's all your fault if the stock tanks

That's a bit hard Noirua, blaming others if LNC tanks. After all, YOU are the one who started this thread on LNC.

Mickel · 14 June 2010

Justyn Peters gave a Limelight talk in Melbourne on Friday 4 June.

There is an audio broadcast of the event (approx 1hr 30mins) on LNC website
under the tab "News & Links".

This presentation answers a number of questions raised here recently, including gas supply in Sth Aust.and AFC energy unit situation.

There is also an Fund Manager review of the company in the broadcast.

Coal Face · 15 June 2010

Does nobody here realise the potential for Linc if they take exclusivity on Fuel Cells for UCG?

Look at slide 11 where there are 11 UCG projects near Linc's Chinchilla plant, if Linc take exclusivity they could either build owner-operator power stations at the other 10 projects, or maybe 6 spread between them and pipe the gas from each UCG to its nearest power station.

The Gov't WANT Linc to build 400MW from day 1, they are the one's pushing Linc up from its old plan for 200MW, so the power demand is there and by the time it is in(begining 2012) the infrastructure will be too.

Slide 12 shows the planned power grid for the area. Slide 10 is worth a look too.

The coal to liquids plants in the area will have spare hydrogen, just as Linc would have had if they had built the GTL plant before the power plant. So there is scope for fuel cells to be put in by Linc on those GTLs.

By securing exclusivity over AFC fuel cells for use in UCG, Linc would become the #1 UCG power station company, supplying power stations with the lowest CO2, lowest particulates, highest efficiency, lowest CAPEX and lowest OPEX. These could be supplied to other UCG's in Australia(note Carbon Energy and Cougar, Liberty and others will tender out the power station to an owner operator, then they will see the syngas to that power station), USA, Alaska, Canada, UK, Germany, Vietnam, etc etc. Linc could have 50GW+ in place over the next 20 years.

Then the last slide for the cherry on top for those with doubts about the area!

Key messages to take home…
Major international companies are currently investing $140 Billion in our region

http://www.lgsa-plus.net.au/resourc...own-Western-Downs-Regional-Council_010610.pdf

basilio · 15 June 2010

Re: LNC - Linc Energy
Does nobody here realise the potential for Linc if they take exclusivity on Fuel Cells for UCG?

Look at slide 11 where there are 11 UCG projects near Linc's Chinchilla plant, if Linc take exclusivity they could either build owner-operator power stations at the other 10 projects, or maybe 6 spread between them and pipe the gas from each UCG to its nearest power station.

There is acres and acres of blue sky in that presentation coal face.

As I read it, it was largely a puff piece to show how vibrant and go ahead that region of Queensland could be. Bit of local promotion. It would be technically impossible for all the possible projects to go ahead in the forseeable future.

But certainly Linc could/should make a big impact if it can prove up the fuel cell technology and actually be the builder and operator of these energy sources.

As I have suggested before there are many examples in business where the best technology and the most cost efficient businesses do not succeed. The winners are often the larger incumbents with "reputation", established political contacts and other capacities to influence governments and authorities. For example in what way does Macquarie bank represent the most cost effective way to run national infrastructure utilities ?

Mickel · 15 June 2010

Coal Face said:
.

The Gov't WANT Linc to build 400MW from day 1, they are the one's pushing Linc up from its old plan for 200MW, so the power demand is there and by the time it is in(begining 2012) the infrastructure will be too.

Justyn Peters in his presentation on 4 June 2010 stated that Sth Aust will most likely have LNC's first commercial operation (gas for power) because of the Government there actively supporting LNC. He stated that the Qld Govt was holding up approvals for commercial operations for various reasons for at least 2 years. The only exception was for a small power supply (50MW).
As far as Justyn is concerned, LNC have no immediate plans to build even a 200MW power station at Chinchilla, so I agree that this looks like a puff piece.

Mickel · 29 June 2010

Announcement by LNC on AFC Fuel Cell trial- all looks good with further trials planned at Chinchilla.

http://www.asx.com.au/asxpdf/20100629/pdf/31r20gbsx0b710.pdf

Still waiting for the Coal Sale Announcement..... then watch the S/P rocket skywards.

basilio · 29 June 2010

Announcement by LNC on AFC Fuel Cell trial- all looks good with further trials planned at Chinchilla.

It's a good story in that it is proving the effectiveness of the alkaline fuel cell in turning hydrogen into electricity. Will be really interested to see how the 50 kw fuel cell is progressing at AFC. That is the core of future commercial developments.

Naturally the market has responded accordingly to this excellent new news. Linc fell from 1.17 to finish at 1.06.

You know even if the coal deal never comes off the commercial/ environmental potential of a cheap fuel cell driven power station is extraordinary.(IMO of course. It would be good to see some independent analysis of this.)

Mickel · 29 June 2010

basilio said:
Naturally the market has responded accordingly to this excellent new news. Linc fell from 1.17 to finish at 1.06.

You know even if the coal deal never comes off the commercial/ environmental potential of a cheap fuel cell driven power station is extraordinary.(IMO of course. It would be good to see some independent analysis of this.)

I understand your frustration, Basilio, but to be fair, the S/P was around $1.10 before the announcement, shot up to $1.15 after the ann before dropping back to finish at $1.06 which was a fall of $0.02 for the day.

I agree that some independent analysis of the fuel cell would be a good confirmation of Linc's position.

craigj · 30 June 2010

in this environment most stocks show nothing on their share increase with good announcements but they are likely to be first movers when the market rallies

basilio · 2 July 2010

Perhaps not surprisingly AFC (Alkaline Fuel cells) has wasted no time highlighting the success of their fuel cell at LINC Chincilla plant. After all they really, REALLY want Linc to make it big with their cell.

Interesting point in their report is the view that the fuel cell will produce electricity at 4p per kwhr

Apparently AFC shares jumped 14% to 22p on news of the successful trial.

http://www.afcenergy.com/wp-content...FUEL-CELL-SYSTEM-IN-OPERATIONAL-UCG-PLANT.pdf

InvestaNoob · 8 July 2010

I'm surprised that news of the AFC trial didn't translate to a spike in LNC as well. Just a matter of time.

Miner · 8 July 2010

InvestaNoob said:
I'm surprised that news of the AFC trial didn't translate to a spike in LNC as well. Just a matter of time.

Welcome InvestaNoob to ASF and for your first posting.
Probably the CEO of LNC Mr Bond has already created so much of hype that this little news from AFC trial did not excite the investors or traders.

DNH

Cheers

basilio · 9 July 2010

Welcome InvestaNoob to ASF and for your first posting.
Probably the CEO of LNC Mr Bond has already created so much of hype that this little news from AFC trial did not excite the investors or traders.

Nice intro to a new member Miner. At least we know that Linc's coal reserves arn't "vapourware". But it would great to have a successful resolution of the never ending coal sale saga. It seems to me that much of the rest of Linc's projections are based on the finance from this deal.

In fact I hope that is NOT totally true. Surely when the company was started the plans for the development of the GTL plant weren't predicated on a $1 billion + magic coal/ Tatts lotto win. And there should be substantial other options in play to exploit the AFC technology as well as the operational UCG plant....

bluekat · 9 July 2010

Maybe, just maybe, LNC should consider mining the coal it cannot sell as a total asset sale. Better to have some positive cash flow rather than the ongoing negative.

LNC - Linc Energy

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